Startled Savers Seek to Save Forgotten Savings

Think carefully: Are you sure you don’t have some money gathering dust in an old bank account you haven’t used for years?

In a country of inveterate savers like Japan, many do: Japanese banks usually don’t require a minimum balance be maintained, nor charge fees on it, so accounts can be easily opened, and then forgotten. In fact, Japanese financial regulators estimate as much as Y85 billion – well over $ 1 billion — lies long-dormant in bank accounts here each year.

But that money may be jerked out of hibernation soon, one way or another. That’s because last week, the Japanese government came up with the idea of tapping deposits in accounts that have been dormant for more than 10 years for funds to encourage new businesses and create jobs. In turn, in recent days many depositors have rushed to their banks to check the balances on semi-forgotten accounts are intact.

Last week Economic and Fiscal Policy Minister Motohisa Furukawa suggested deposits in dormant accounts could generate a substantial flow of money that could be injected to boost the economy. Mr. Furukawa heads up a government working group considering the idea – which is all it is, for the time being.

The notion of governments drawing on unused, forgotten funds may have startled depositors in Japan, but it’s not new from a global standpoint.

South Korea’s government enacted a rule about three years ago that stipulates dormant funds — money unclaimed at financial companies for a specified period of time — can be sent to a state-run foundation that will manage those funds to provide loans for working families.

In the U.K., legislation has been passed that rules money held in bank accounts left unattended for 15 years or more can be transferred to a fund for distribution for charitable purposes.

But if the idea becomes reality in Japan, it could take on major significance given the size of the funds involved — savings deposits far exceed loan balances globally in Japan. The government reckons that about Y20 billion to Y30 billion is likely to be available annually, even after subtracting amounts that are reclaimed by account holders who do wake up to dormant accounts.

It’s not just concerned depositors who have been stirred into action. Japan’s banking industry also balked at the government’s discussion, saying money in dormant accounts belongs to depositors.

What’s more, according to the chairman of the Japanese Bankers Association Katsunori Nagayasu (also president of Bank of Tokyo-Mitsubishi UFJ), organizing access to 1.2 billion bank accounts across the country would take some serious centralized organization.

Comments (2 of 2)

Investing is risky, but Governments, by forcing inflation, is also forcing citizens to either Gamble (i.e. invest) or lose money. Bin Bernanke is very good at it.

1:00 am February 22, 2012

To Tell the very Truth... wrote:

By a very curious coincidence, last week the french government have just "reintegrated" 500 million euros (!) that were said to be "in euro unchanged franc bank notes" forgotten somewhere. 500 million euros - that may have never existed actually - are now re-credited to the french state spendings. And it seems to be a "trendy trick" that Japan wants to use too. After all, why letting others create money from nothing and not doing it oneself ? And as usual, Japan is a marvelous improver, the "forgotten banknotes" will then be found not one time in ten years, but every year. Yeah ! That's better than alchemy, for sure !

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